New York State enacted changes to limit what hospitals in New York can charge eligible patients for emergency and medically necessary services and to strengthen consumer protection laws for patients with medical debt in 2024. The changes include prohibitions on health care providers from placing liens on an individual’s primary residence or garnishing wages to collect medical debt, as well prohibitions on reporting medical debt to consumer reporting agencies and removing unpaid medical debt from credit reports. These protections, however, only apply to debt incurred with open-ended or closed-ended financial products specifically for the payment of health care services (e.g., CareCredit®). If a patient elects to pay with a traditional credit card, these heightened medical debt protections do not apply.
In October of 2024, the NYS Department of Health (“DOH”) issued guidance to address three areas of the new consumer protection laws applicable to healthcare facilities and providers as of October 20, 2024 (see DOH DAL CPSO 2024-01, at pp. 5-6):
1. Hospitals and health care providers (and their agents) are prohibited from completing any portion of an application for medical financial products for a patient or otherwise arranging or establishing an application that is not “completely filled out” by the patient (NY General Business Law, § 349-G). The DOH guidance clarifies that providers “may answer patient’s questions and provide assistance if requested, so long as the application is completed wholly by the patient.”
2. Hospitals and health care providers are prohibited from requiring credit card pre-authorization or requiring the patient to have a credit card on file prior to providing emergency or medically necessary services (NY General Business Law, § 519-a) The DOH guidance states that health care providers “may ask patients to voluntarily choose to have a credit card on file but may not require patients to do so.”
3. Patients must be notified of the risks of paying for health care services with a traditional credit card each time a credit card is used (NY General Business Law, § 519-a). Even though the requirement to obtain the patient’s affirmative acknowledgment of these risks each time a payment is made may present operational issues, the DOH guidance for this requirement is very specific:
The following apply in each instance in which a patient uses a credit card for medical services:
i. Patients must be advised that “medical bills paid by credit card are no longer considered medical debt.”
ii. Patients must be advised that, by paying with a credit card, they are “foregoing federal and state protections around medical debt.”
iii. Patients must acknowledge forgoing the following protections:
1. Prohibitions against wage garnishment and property liens
2. Prohibitions against reporting medical debt to credit bureaus
3. Limitations on interest rates
iv. Patients must affirmatively acknowledge that they are foregoing these protections by paying with a credit card.
Providers will need to obtain (and memorialize) patients’ acknowledgments in all instances, including payments by phone, electronic means and in person Industry suggested mechanisms to document the patient’s acknowledgement for telephone payments include utilizing a recorded line (i.e., technology that allows the patient to input a credit card number without the representative having access to it) and having provider staff read the disclosure to the patient and obtain a verbal consent at the time the payment is made. For electronic payments, patients should acknowledgment the disclosure language before the payment is processed. For payments in person, provider staff should provide a written disclosure form to the patient for signature, with signed paper copies scanned into the patient’s record, or patients can read the disclosures on the payment screen, indicate their agreement, and then sign to authorize the payment.
Note: The NYS Fiscal Year 2024 budget also enacted a new Section 18-C of the Public Health Law, which requires separate patient consent for payment (which can’t be combined with a consent for treatment and which “shall not be given prior to the patient receiving such services and discussing treatment costs”). DOH has paused implementation of this requirement until further guidance is released.